Hey future landowner! Ever wondered about the real costs that come with that dream plot you just bought? In this blog, we’re diving deep into the world of post-purchase land costs. Join us at Brookspace as we unravel some of the post-purchase land costs, giving you a clear picture of what awaits in your property ownership journey.
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Title Search
In post-purchase land costs, the title search stands as a pivotal step that could make or break your property ownership experience. It involves a thorough examination of the property’s legal history, ensuring that the seller has clear and undisputed ownership rights. This step is indispensable because it safeguards you from potential legal complications and unforeseen issues tied to the property’s title. So, why is it important to include the title search in your post purchase land costs? It’s your key to a worry-free and legally sound ownership journey.
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Legal Fees
Legal fees, play an important role in safeguarding your investment and ensuring a seamless transition of property ownership. Involving a thorough examination of contracts, compliance checks, and expert guidance through the intricate legal landscape of real estate transactions. In addition, these fees act as a protective shield, preventing potential legal pitfalls. By investing in legal expertise, you are not only securing your present transaction but also fortifying yourself against any legal challenges that might arise in the future. Legal fees aid in providing peace of mind and a solid foundation for your property ownership journey.
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Transfer Fee
Transfer fees, a noteworthy element within post-purchase land costs, are a mandatory aspect of the legal process. The help facilitate the official transfer of the property from the seller to the buyer. By covering the transfer fee, you are ensuring that the change in ownership is properly documented and legally recognized. This establishes your rightful ownership and protecting your interests in the property. Neglecting the transfer fee could lead to complications in the future, potentially jeopardizing the legitimacy of your ownership.
The key components of transfer fees include;
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Land Rates
Land rates are usually annual property taxes. They are levies imposed on all parcels of land and payable to the Kenya Revenue Authority under Section 2 of the Stamp Duty Act (Cap 480). The land rate fee is determined by various factors, including the size of the property and its designated land use category.
2. Stamp Duty Fee
This is a form of tax that governments place on legal documents, usually involving the transfer of real estate. This fee is payable to the Kenya Revenue Authority under Section 2 of the Stamp Duty Act (Cap 480). The stamp duty fee in rural areas is 2% of the property value whereas, in urban areas, the stamp duty fee is 4% of the property value.
3. Capital Gains Fee
Capital Gains Tax (CGT) is imposed on the profits acquired from the sale or transfer of property situated in Kenya. The tax is typically paid by the seller upon making a profit from the sale of the property. It is generally post-purchase for the seller but is not a direct cost for the buyer.
4. Land Control Board Fee
The Land Control Board (LCB) in Kenya plays a crucial role in safeguarding the interests of all parties involved in land transactions. Their primary aim is to prevent potentially harmful situations, such as a seller putting themselves in jeopardy. Additionally, the LCB oversees transactions involving clan or community land, preventing any adverse consequences that may arise from such sales. To facilitate their services, the LCB charges a fee of Ksh1000. This fee contributes to the administrative processes involved in securing approvals and adherence to legal regulations during land transactions.
